#AhenteTips Episode 11: Know These Terms

You have to be an expert in your field in order to be trusted by your Clients. Be a "consultant" instead of a seller or agent. Knowing these terms will impress your Clients and make you a trusted real estate seller for them.

1. Letter of Guaranty

This is the letter from the bank guaranteeing that they have already approved the home loan application of the Client. The letter also states that they promise to pay the developer the full loan amount of the Client, subject to specific terms and conditions.

2. Fixing Period

This is the period, usually in 1 year, 3 years or 5 years, in which the interest will be fixed and will not change. Only after the said period will the interest change depending on the current market condition. 1 year fixing period can give you lower interest rate than longer fixing period, but there is a risk of the interest being increased after only 1 year.

3. Amortization

Amortization is the equal monthly payments of the Client for their home loan to the bank. This includes the principal payment and the interest compounded annually. This will change after the expiration of the fixing period, depending on the market condition at that time.

​4. Bank Charges

This is the fee that the Client will pay directly to the bank for their loan application. This is approximately 3% of the loan amount and includes the processing fees, notarial fees, mortgage redemption insurance, and other insurance covered by your loan.

5. Loan Takeout

This is the time when the bank already booked the loan and paid already the developer the full loan amount of the Client. This is technically the start of the loan, and exactly one month after that will be the start of the amortization.